Illicit trade of tobacco is estimated to make up to 40 percent of the market in the country and greatly affecting the national Tobacco Enterprise and the country.
Contraband has been severely affecting the tobacco industry despite a recent MOU signed between the customs commission and the National Tobacco Enterprise to combat illegal tobacco trade.
An MOU was signed between the two parties back in June focusing on three pillars: intelligence, Identifying legitimate products and showing seized illegal tobacco products.
Apart from the two major brands which control 90 percent of the market, Duty free tobacco products make their way to retail shops largely via Ethiopians coming from abroad and those working for the diplomatic community.
“Anyone can get cigarettes with duty free stamps in retail shops even though they are only targeting diplomatic communities, but because of the corrupted network that exists in the enterprise and Ethiopian drivers who work for the diplomatic mission, the illegal trade is getting out of hand” said Grant Mowat, General Manager of the National Tobacco Enterprise.
Ninety percent of contraband trade which engulfed the market, was produced in in Dubai and Yemen and were shipped through Somaliland and Djibouti.
“Although we are entitled to the monopoly in principle, the illicit trade takes almost half of the market share which also has an impact on the government in terms of tax collection” adding that his company is one of the 160 companies awarded in recognition for paying their taxes properly, the manager said.
As part of efforts to combat smuggling, all cigarettes imported into Ethiopia must be marked with a National Tobacco tag.
The previously state owned National Tobacco Enterprise was recently acquired by the multinational JTI and expanded. It is Ethiopia’s only manufacturer of Tobacco.
In Ethiopia, recent data suggests that 8.9 percent of males aged between 15-49 are smokers.
Illegal tobacco trade affects monopoly
Chinese textile manufacturer raises investment to a billion dollar
Chinese textile product manufacturer, Sunshine Ethiopia Wool Manufacturing Company, is set to increase its investment portfolio in Ethiopia to 980 million USD.
The Chinese textile firm, which has been part of the Adama Industry Park since 2016 has a registered investment capital of 350 million USD, but plans to further increase its investment capital in Ethiopia to 980 million USD as part of its second phase investment.
Chen Min, General Manager of Sunshine Ethiopia Wool has indicated that the planned investment would be important for the company’s current exportportfolio.
The General Manager, however, voiced his concern over recurrent electric power interruption as a major bottleneck affecting the company’s manufacturing chain.
“The ongoing frequent electric power interruption has led the factory to greater performance uncertainty in its ambition to expand its business,” the manager adds.
The general manager also noted that there are times that the factory encountered total blackouts for five or more days, eventually halting operations inside the plant.
“Such power issues are hampering the factory’s production capacity, and hundreds of employees are stranded inside the factory awaiting the return of light which has an effect on efficiency,” Chen said.
In addition to challenges attributed to recurrent power cuts, investors also expressed their concern over the waste-water treatment scheme at the Adama Industry Park.
Previously the government assured investors it would be finished on time but that has not been the case.
“It poses another challenge to our factory because we can’t afford trucks to transport 260 tons of industrial waste every day or to take out waste from the factory,” Chen said.
The textile firm, when operating under normal circumstances, has an annual production capacity of 10 million metric ton of wool fabrics, according to the general manager.
Ephreme Bekle, Operation manager of Adama Industrial Park, told Capital that they are aware of the situation and will solve the problem
The industrial park was built by China Civil Engineering Construction Company, and is part of the Ethiopian government’s grand plan to transform the country’s largely agrarian economy into an industrialized one by 2025.
Covering 100 hectares of land and built at a cost of around 146 million USD. It was inaugurated by Prime Minister Abiy Ahmed.
Obtaining passport still delayed
The Immigration, Nationality & Vital Events Agency says that people must meet five criteria to obtain a passport.
Although citizens who hold kebele identification cards and birth certificates can obtain a passport from the agency, they have to wait for 45 days as the shortage of hard currency has affected the supply of passport books.
According to the Agency in order to get an expedited passport, applicants must present documents from government institutions including a letter of recommendation, proof of a medical condition, an active visa, or engagement in inport-export trade. Expedited passports cost 2,186 Birr.
“Even though there is some relaxation after working with the National Bank of Ethiopia to get foreign exchange to import passports, still, there is a problem getting passports quickly,” said Desalegn Teressa, Agency Communication Director.
For the, the applicant should wait for 45 days to get a passport through the normal procedure, which costs 600 Birr for 32 pages and 900 Br for a 64-page passport.
The rules are different for those looking to travel to Middle Eastern countries that Ethiopia has signed bilateral labor agreements with. They should bring a certificate of competence that shows a three-month training from accredited institutions.
Currently, the agency is working in its full capacity to serve 2000-3000 citizens.
The Agency has nine branches in: Adama, Semera, Jigjiga, Hawassa, Dire Dawa, Jimma, Dessie, Bahir Dar, and Meqelle.
Getting Africa on Pace
Joy Kategekwa is Head of UNCTAD Regional Office for Africa since 1 July 2015– leading delivery of the organization’s trade capacity building programs to Pan African Institutions across Africa.
She is an international trade and development law and policy specialist and has spent the last 16 years shaping development-friendly trade agreements at both the World Trade Organization and in Regional contexts.
She is one of the architects of the African Continental Free Trade Area, and has led technical teams in designing the draft legal negotiating instruments for the AfCFTA. Trade and Development Strategy (2017-2022) and the SADC Bilateral Investment Treaty Template and others.
Prior to joining UNCTAD, Kategekwa was an official at the World Trade Organization responsible for the portfolio of African participation in the Doha Development Agenda negotiations, and the Committee on Trade and Development. She is the author of a series of peer-reviewed publications in world-class legal journals. Her book “Opening Markets for Foreign Skills: How Can the WTO help?” is an acclaimed treatise on matters concerning international trade in services and the movement of persons in cross border trade.
She holds a Ph.D. in International Trade Law from the University of Berne’s prestigious World Trade Institute, a Master of laws in International Trade and Investment Law from the University of the Western Cape, and a Bachelor of Laws from Makerere University. She has a track record of academic excellence – was Uganda’s first state scholar in 1998, and has taught at various leading training institutions offering programs on international trade and development law. Capital catches up with her to talk about the work UNCTAD in the region. Excerpts;
Capital: It is known that the UNCTAD report on the digital economy which indicated that Africa lags behind the US and China which dominate the digital economy, what should African countries do? Could you also discuss UNCTAD’s support for African countries? 
Kategekwa: As you rightly said, UNCTAD launched in 2019, a digital economy report focusing on value creation because it is the name of the game when it comes to gaining traction in the digital economy. It is really a data and platform game. Who owns the data and manages to transform the data analytically and transforms it into intelligence and transforms something monetized back to the public in terms of advertising and so on. So the striving point is Africa is lagging behind but it is not the last, Africa is at the bottom, what that propagates is a yawning gap of inequality, and makes difficult to structurally transform the economy to enable it to break out of the cycle of poverty.
In this regard, UNCTAD works in two ways, The first one is Bringing the issue to the table from knowledge perspectives in creating a sound platform of knowledge products that analyses the trends, the dynamics and the social challenges from economic perspectives and pays attention to what the digital economy is , You know UNCTAD is a knowledge institution.
Intergovernmental, a conversation about the development challenges and what the consensus would be in terms of countries to break this digital economy, is the second area that UNCTAD is working on. Our inter-government group of experts in the digital economy is critical in dealing and interrogate these multilateral issues and find solutions as a digital economy is global issues. In African UNCTAD also support to contextualize the issue with their status, UNCTAD has the tool called the rapid e-trade readiness assessment that helps countries to know where they really are in terms of law, institutions, infrastructure, data protection, recognizing data resources, skills, etc it is critical because it allows countries to know the gaps and opportunities. And now, the policy recommendation and action to take and support in capacity development. Tip review, Science and technology innovation policy review is also another intervention UNCTAD does, data is the realm of ICT, and countries should know the capacity of their ICT and understand the gaps in terms of gaps and opportunities.
Capital: The African Diaspora has started moving to support their continents’ efforts in the digital economy, what have they done far?
Kategekwa: I think Diaspora are a critical part of every countries growth toll, human resources, you can’t quantify the contribution of Diaspora in the development process, the digital economy requires a high level of entrepreneur skills, has the knowledge, with the financial skills The African Union has the initiatives, UNCTAD does not a specific roll to deal with that, But we support countries who want to shape polices and to see how Diaspora dividends can harness the national economic growth. We are supporting some African countries to erect polices to create bonds with Diaspora that allows contributing for their countries.
Capital: CFTA will be implemented soon, but the continent is behind the rest of the world when it comes to digtitzlizing the economy, what can be done?
Kategekwa: CFTA is a very ground breaking phenomena. It promises to change the life of Africans in terms of fighting poverty, and enhancing the economy by empowering small and medium size enterprises. CFTA is a developmental blue print of the continent, so the link is digitalization and democratization of how to use the opportunities in terms of market gap This includes information. Digitalization increases the room for trading as the digital economy is how we use data, so, electronic commerce is one of the critical parts. Inter-African trade allows companies, large or small, to scale in feasibility and the market is offering market access.
Therefore, I don’t see an effective CFTA without digitalization of the economy.
Capital: UNCTAD is supporting the Ethiopian government’s entrepreneur strategy, tell us about that? And do you think the plan is ambitious?
Kategekwa: The plans to create close to three million jobs are not ambitious in the first place, plans should be ambitious, because behind ambitions there is a plan to fight poverty, and one of the critical ways to fight poverty is to empower people to create their own jobs and entrepreneurship is one of the tools.
UNCTAD is supporting the government of Ethiopia in designing it’s national entrepreneur strategy, where our work in supporting global network of developmental practices under investment division, enterprise branch. What are the specific pillars of intervention that need to be assessed, strengthen entrepreneurship, and of course to find financing and so on.
Capital: How is UNCTAD contributing to Ethiopia’s economic reform and the so called “home grown economy”?
Kategekwa: I think it is fascinating as it is branded as a home grown economy in a sense that Ethiopia has its own model of development, a model that UNCTAD supported for a long time in a global market place of ideas And UNCTAD is behind Ethiopia’s model of the developmental state and to it is better to understand the specify of their economy how they want to position trade.
UNCTAD is also supporting Ethiopia in Diaspora bonded policy, there is the science and technology policy review to support intellectual property rights can support industrialization, and also work with ministry of trade in connection to WTO accession. We also support countries to shape their own trade led growth.
Capital: What will be the fate of regional trading blocs such as ECOWAS, and COMESA after CFTA comes into force?
Kategekwa: Although inter African trade is not on the level of expectation it is really growing. Concerning the fate it is the political agenda of the African Union, but there should be a lot work done in facilitating trade in the continent .The idea of CFTA is a key regarding broadening the market, however, it is the interest of ECOWAS or other regional trading blocs’ to make sure that CFTA adds value in their trade arrangements. The closest countries are the trading partners of the countries, and of course their interaction is not a kind of sacking out the energy of regional trading blocs and vises versa.
